Pulp Mills and the lock in effect

Asia Pulp & Paper is planning to build a huge new pulp mill in South Sumatra, Indonesia, although the company is still trying to publicly deny it. This will reportedly be one of the world’s biggest pulp mills, with a planned production capacity of up to 2 million tonnes per year. APP is already in contact with large machine building companies in order to source the required equipment.

Building new mills without sufficient sources of plantation fibre already being available will be a disaster for the forests, because history has shown that APP’s pulp mills are not only fed by pulp plantations but by rainforests. If this pulp mill is built, it looks set to generate a huge pulp deficit, which the rainforests of Indonesia will be paying for, for years to come.

A new coal fired power plant locks us into a climate wrecking energy model. The danger is that a new mega-pulp mill will lock APP into a model of forest destruction. Because the financial investments required to build such a mill are enormous, and therefore huge debts are created. These debts can only be paid by running the pulp mill at a certain capacity and speed. APP has already gone bust once, more than a decade ago, by operating to just this expansion model.

APP will need banks and insurance companies to finance this mill. However, banks are risk-averse and are increasingly becoming aware of risks associated with forests and climate. And if there is one company that embodies ‘environmental risk’, it is APP.

A coalition of 60 NGOs and civil society groups have come together to send an appeal to the financial sector not to finance the mill. The appeal is supported by a large range of Indonesian civil society groups and international NGOs and has been sent to more than 40 financial institutions in 10 countries. We will be closely following what these banks do.

This pulp mill might well become the next battleground between APP and the broad coalition of civil society groups that defend the interests of the communities and the inhabitants of the forests. To avoid that, APP must demonstrate that it has access to sufficient plantation sources to both ensure that its existing mills use no rainforest fibre and that a new mill can do the same. But, APP is a long long way from convincing its critics of that.

APP is hugely influential within China, a country whose large new pulp and paper mills - with some exception - seem to have been funded without intern...

APP is hugely influential within China, a country whose large new pulp and paper mills - with some exception - seem to have been funded without international banks and insurance companies.

Your strategy will fail unless you are lobbying - in Mandarin - banks in China and provincial governments where APP has a substantial presence. Identifying those which are relevant is very simple.

Your strategy will also fail if you do not insist that Export Credit Agencies or their equivalent in countries which manufacture the machinery do not cover exports of that machinery. Such cover would further embed a global business model which will accelerate climate change, making it impossible to pay for the exceptional standards of welfare enjoyed in the countries of manufacture. The benefit of any "economic growth" which manufacture might generate will be wipped out very rapidly by the cost of consequent climate change.

If the advertisements for APP relayed on CNN morning news within the EU, particularly Brussels, are an attempt to deceive viewers and policy makers, please demonstrate this to the EU's advertising standards authorities with a view to halting them.

Please bear in mind that APP seems to have become influential within North America - not least because it has procured mills there. This would partly explain why illegal imports from APP in either China or Indonesia have yet to be investigated under the Lacey Act (which prohibits the import of illegal wood-based products).

However, if (during the few years since pulp and paper were included under the Lacey Act), no one has made formal allegations to the USA authorities concerning their presumed illegality, then this would imply that civil society and others do not actually believe that APP's business involves, let alone is premised on, fraud or other illegality. In which case, what's the fuss?